Question ID : 44650

GST APPLICABILITY 12AA TRUST

ABC CUSTOM BROKER ASSOCIATION. ASSOCIATION IS CHARIRATABLE ENTITY REGISTERED U/S 12AA OF INCOME TAX ACT. WE ARE CHARGING MEMBERSHIP FEES ANNUALY. TRUST IS WORKING FOR ITS MEMBERS FOR EDUCATING, CONDUCTIONG SEMINARS AND ISSUE SOLVING FOR MEMEBERS WORKING AS CHA. FURTHER MAKING VARIOUS REPRESTATION WITH GOVERNMENT AND TAX AUTHORITIES FOR BETTERMENT OF CHA MEMBERS. WHETHER GST APPLICABLE ON MEMBERSHIP FEES AS ANNUAL MEMBERSHIP CROSS 20 LACS? IS THE ACTIVITIES COVERED UNDER CHARITABLE ACTIVITIES AS PER GST ACT? IS THERE ANY OTHER BENEFICIAL PROVISO TO SUCH TRUST/ASSOCIATIONS WITH RESPECT TO GST EXEMPTION?

Answer ID : 85422

Members of the association and the association are the distinct person. Hence the fees received from members is treated as supply and therefore GST is applicable on such membership fees received.

Answer ID : 85423

Unless otherwise exempted, all the supply of goods and services are taxable. Further, in terms of Sec 7(1)(aa) of the CGST Act, the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration is also a supply. This provision overrides the mutuality concept (i.e., the association and the members are one and the same) Considering the above, 3 exemption entries provided in the Notification 12/2017-CT(R) amended from time to time, would be relevant to consider, Sl.NO 1- Charitable actvities by the TRust under Sec 12AA is exempt. For the present set of facts the activities provided by the association do not qualify to be charitable activities. (The term Charitable activities are defined in the same notification) Sl.No 77- Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution – (a) as a trade union, are exempt under GST SL. No 77A- Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in, promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment, to its own members against consideration in the form of membership fee upto an amount of one thousand rupees (? 1000/-) per member per year, are exempt under GST, If the conditions placed above are not satisfied, then GST is payable on the membership fee collected from the members (i.e., CHA's), The case shall be analysed based on the Byelaws etc., to reach to a conclusion.

---